RFID Fights Retail Crime

Mar 1, 2006 12:00 PM, By Jacqueline Emigh

RADIO FREQUENCY IDENTIFICATION is now being tested in new ways to fight shoplifting and other forms of retail shrinkage, although its name is still more closely associated with warehouses and back-end supply chain management. Sometime over the next few years, RFID could be fully up and running at a store near you.

At the local mall, RFID can be used to stop shoplifters from sliding luxury goods into their pockets — or even to keep bands of thieves from slipping out the back door with stolen loot. New applications extend beyond the familiar electronic article surveillance (EAS) systems used to stop shoplifters at an exit door.

Information technology vendors of various sizes have begun to develop new RFID systems for retail stores, and some of them are now testing and/or demonstrating in-store solutions aimed either partly or entirely at curbing retail theft.

At the National Retail Federation (NRF) show in January in New York City, for instance, wireless specialist Symbol Technologies, Holtsville, N.Y., used its booth to showcase a multivendor solution for protecting store exits against crime.

Symbol's demonstration combined its own RFID hardware with back-end computer servers from IBM, Armonk, N.Y., and a video-based path analysis system from ClickIt Inc., New York. As implemented at NRF, ClickIt's system integrates its own software with digital video recorders and analog surveillance cameras from other vendors.

In another corner of the NRF show floor, Montreal, Quebec-based Riba Retail showed a non-video solution for “personalized shopping” that might also deter shoplifting in retail fitting rooms, a place where cameras are generally prohibited from monitoring.

Elsewhere at the NRF conference, other demonstrations extended the RFID surveillance model — either with or without video — to upcoming RFID self-service checkout stations.

At these unmanned cash registers — also being touted as boons to speedy checkout — shoppers of the future will either swipe their credit cards, or wave the cards like wands in front of RFID readers, to pay for goods affixed with RFID tags.

Capable of carrying pricing and detailed product information, RFID tags can typically be scanned at distances of several feet by “fixed,” or stationary, RFID readers, portable handheld PDAs and other RFID-enabled in-store equipment.

NRF attendees were told that, if a shopper of the future fails to pay at a self-service RFID checkout station, a “perimeter security system” made up of RFID readers will alert store staff immediately, at the same time precisely identifying any missing items.

Right now, approaches such as these are still being tested mainly in vendors' labs. But with large RFID pilots now starting to migrate from warehouses and distribution centers into retail stores, the full potential of RFID as a weapon against shoplifting will be realized, observers say.

ClickIt, in fact, has already been approached by one major consumer packaged goods manufacturer about a possible test of an RFID-enabled anti-theft solution, says Jim Paul, ClickIt's director of sales.

“In some cities, (thieves) are going into one store after the other and stealing entire rack displays of this company's products,” Paul says.

ClickIt's potential customer is interested in trying out the vendor's software — together with RFID technology, DVRs and cameras — to pinpoint the perpetrators of these rack removals.

From ClickIt's point of view, RFID constitutes one of a number of different “alarm systems,” also encompassing EAS tags, according to Paul. The company's software uses triggers from these alarms as signals to start capturing video.

“If a back door of a store opens at 12:30 a.m., and the door should not be open at that hour, this is a trigger for us,” he explains.

The software also includes path analytics for helping to identify objects in the video, along with the directions in which those objects are moving.

“If, at a later time, law enforcement becomes interested in what occurred, the video can be segmented off,” Paul adds.

In Symbol's demo at the NRF conference, ClickIt's software functioned in much the same way. Symbol's prototype of a retail store revolved around large fixed RFID readers at the exit doors, fashioned for the event out of Symbol's recently introduced RFID readers for forklift vehicles.

In real-world deployments of this type of technology, fixed readers of some sort would alert the system if a crook got out the door with an RFID tag still attached to a piece of merchandise, says Chris McGugan, Symbol's senior director for product management.

An actual implementation would also require hefty back-end server power to run the attached video system as well as to store both captured video and RFID product data.

Meanwhile, Symbol and IBM have integrated IBM's Systems Solutions for Retail Stores, a hardware-and-software package based on IBM's blade servers, with a wireless LAN switch from Symbol, to support in-store communications with devices such as video systems and Symbol's handheld and forklift RFID readers.

IBM's blade servers are powerful, yet small enough to be set up in the back room of a branch store, says Ubay Wattwe, IBM's program director for xSeries servers and blade center solutions.

Securing the fitting room

Riba, another Symbol partner, is also in pre-trial mode with its proposed RFID solution for retail fitting rooms. A major goal behind Riba's system is to help turn a shopping trip into a more customized experience, says Riba's Ian Auerbach. Although the demonstration at NRF used barcode technology, the system might easily be outfitted for RFID, he says.

In the scenario presented by Riba, when a shopper arrives in the fitting room, a store associate uses a PDA to scan in the items of clothing the shopper has selected.

From a Web kiosk inside the dressing room, the shopper is then able to browse through related items — such as a shirt and tie to match — and to beam requests to store associates over a wireless network for more apparel to try on in the booth.

An added benefit is that if the shopper leaves the booth without all of the scanned-in garments in hand, RFID technology would be able to tell.

In one recent study, market research firm Kurt Salmon Associates (KSA) suggested RFID-enabled fixed readers as another alternative for heightened security in fitting rooms.

“Mounting a fixed reader/antenna at the entry and exit points of the fitting room can also deter theft and aid in the apprehension of would-be thieves. Intelligent software can link merchandise movement by image association and time-stamp serialized merchandise through this area of the store. When customers take garments into the fitting room area, serialized tag information will be captured along with directional movement,” according to the report.

“Professional thieves aware of such systems may be more apt to bypass this protected area of the store,” the report concludes.

In-store RFID technologies have gotten a boost from the recent RFID initiatives of big chains like Wal-Mart, Target and Tesco. Wal-Mart, for example, is already migrating RFID into retail stores, after rolling out the technology at the warehouse level over the past couple of years.

Under an RFID mandate imposed by Wal-Mart, increasing numbers of product suppliers — starting with the biggest ones — have been required to attach RFID tags to cartons and palettes shipped to distribution centers. Over time, the Wal-Mart initiative is expanding to include “item-level” tagging, which calls for tags to be affixed to individual items on retail or pharmaceutical shelves.

So far, the RFID initiatives of major retailers have been mainly geared to bolstering processes such as inventory control and asset management. Still, the use of RFID can help to curb both warehouse and retail theft, problems among warehouse and store employees, says Justin Hotard, Symbol's director of customer markets, RFID.

Warehouse theft — also known as “product diversion” — will see further reductions somewhere down the road, when item-level tagging can be combined more effectively with carton- and pallet-level tagging, according to KSA's report.

“The ability to track unique serialized garments and associate them with cartons and pallets significantly improves brand owners' ability to monitor post-shipment diversion to unauthorized sales channels,” the researchers wrote. “Individual garments can be associated with ship-to customers. Subsequent monitoring at off-price or unauthorized retailers will identify sales policy violators.”

At the same time, giant chains such as the Metro Group, a German-based IBM customer, have been experimenting with RFID-enabled regalia such as “smart shelves.” The retail system gets updated in real-time whenever a shopper removes or puts back an item from a smart shelf.

More pilot and commercial implementations integrating anti-theft technology are likely to occur when retailers and product suppliers have to implement end-to-end RFID systems that are capable of managing product data even down to the SKU (stock keeping unit) — or individual item code — level, Paul says.

Other obstacles range from lingering consumer privacy concerns to various technical barriers still surrounding RFID. For example, although technology continues to progress, some argue that most RFID tags continue to be impacted by temperature and moisture, making it tough to get an accurate read on a refrigerated rib roast or a carton of frozen shrimp, for instance.

Moreover, even with costs inching downward all the time, RFID tags remain costly, experts agree.

“Everyone's been using five cents (per tag) as the holy grail. We keep getting closer to that, but we're not there yet,” says Frank Riso, director of retail vertical markets at Symbol.

“From a customer perspective, putting a tag on a DVD makes sense if RFID can reduce theft by 10 percent each year. But using a tag on an item that sells for 79 cents is a different matter.”

For this reason, Riso predicts, most early deployments of item-level RFID in retail stores — whether for curbing crime, or not — will be confined to higher-end items such as DVDs, designer clothing and consumer electronics.

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